Wednesday, September 4, 2013

A Fast Food Chain Paying ABOVE the Minimum

Boloco, a Boston-based burrito chain, pays its entry-level workers anywhere from $9 to $11 an hour, most of them making $10, with many who advance into higher roles making $17 an hour or more, CEO John Pepper told Fox Business News.

Unlike the majority of his industry, Pepper told host Stuart Varney, “As opposed to constantly looking for ways to keep wages down, we’re constantly looking for practices and ways to bring wages up.” Given that labor is one of the biggest costs for fast food chains like his, many companies like McDonald’s and Burger King are notorious for keeping wages low. “It’s a lot easier to keep wages down than it is to find better practices, bolder practices, more efficient practices, which come through training,” he noted. But paying more and treating workers better is Boloco’s path to profits.

“It’s about connecting with guests…and building a loyalty that drives people back, that alongside productivity is what builds sales and what builds profitability,” he said. “In that case you can pay people a lot more than what we pay as a rule in this industry.”

And while a burrito at his restaurant costs more than a burger at McDonald’s, a lot of the higher price is due to higher quality ingredients, not paying workers more. Those price increases for organic and humanely raised food have been greeted by customers who have said, “Okay, we’ll pay,” he noted. “But what about the people?” he asked. “What about paying people to come in and have high quality lives just like we want the cows to have high quality lives?”

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Meanwhile, Pepper is right that higher wages can be a boon to business. Many studies have shown that raising the minimum wage doesn’t hurt job growthand can actually help businesses by raising productivity, lowering turnover, and increasing demand when workers have more money to spend.